OPEC+ decision to increase production supports oil, rapeseed and corn prices

The OPEC+ countries supported the decision proposed by Saudi Arabia and the Russian Federation to cut oil production by 2 million barrels/day starting in November, which led to a further increase in quotations. The United States reacted negatively to this, which is trying to limit the prices of oil and agricultural crops in order to slow down inflation and support the world economy. The White House called such a decision “a mistake that shows that OPEC+ has followed Russia’s lead.”

December Brent crude oil futures rose 9% to $93.3/barrel from Monday, and November futures rose 10% to $87.7/barrel, adding 11.5% and 13% to prices, respectively, for the week.

The increase in oil prices will restore the growth of gasoline prices in the US, which have been falling for the past 3 months. However, the White House has already asked the country’s Ministry of Energy to analyze the possible consequences of a ban on the export of gasoline, diesel fuel and other refined products from the United States in order to reduce domestic prices, Bloomberg reports.

Falling gasoline prices will reduce demand for ethanol, the production of which for the week of September 24-30 averaged 889,000 barrels/day, which is 34,000 barrels/day higher than the 1.5-year low reached last week. Ethanol stocks fell by more than 1 million barrels to the lowest level since December 2021, at 21.685 million barrels.

Quotations for corn remain unchanged against the background of low demand and active exports from Brazil. The export of corn from the USA in August decreased compared to July by 28% to 3.3 million tons, and in 2021/22 MR amounted to 62.77 million tons, which corresponds to the forecast of the USDA, but is inferior to the indicator of 2020/21 MR – 69.8 million tons

According to the estimates of the Ministry of Foreign Trade, Brazil exported 6.8 million tons in September, which is significantly higher than the figure for September 2021 – 2.9 million tons.

In the near future, quotations will be supported by a decline in the corn harvest forecast in China and uncertainty with the operation of the grain corridor from Ukraine.

According to the forecast of the representative of the USDA in China, in 2022/23 MR, the country will harvest 270 million tons of corn, which, due to the low yield, will be 4 million tons less than official estimates, and 2.5 million tons less than last year’s figure. The import forecast is left at the level of 18 million tons, which corresponds to official estimates, but it may be adjusted in the second half of the season.

Canola was lower yesterday as traders took profits after a sharp rally, but continued to gain today following canola prices in Canada.